Financial Regulation Reform's Latest Twist

It appears the top lawmakers on the Senate Banking Committee are still at an impasse on a proposal to overhaul the financial system, and that has created an unusual bipartisan negotiating pair.

In a statement released Thursday morning, Senate Banking Committee Chairman Chris Dodd (D-CT) said he reached out to a senator among the lower half in Republican seniority on the committee – Senator Bob Corker (R-TN).

“Senator Corker has proved to be a serious thinker and a valuable asset to this committee,” said Dodd’s statement. “For that reason, I called him Tuesday night and asked him to negotiate the financial reform bill with me. We met in my office on Wednesday and, given the importance of these issues, he agreed.”

One financial industry source described the talks as “very” serious and said the two decided to put off until later one of the most contentious issues – the creation of a new regulator to write and enforce rules on financial companies to protect consumers.

“They are working on the other issues first, and then will tackle the tough one - CFPA,” said the industry source.

“Dodd is in a hard place with CFPA and the administration,” said another industry lobbyist. “Corker definitely cares about this and I think he wants to raise his profile.”

Corker says an independent organization is a "deal breaker."

"Let's make sure we do it in a way that is in balance and certainly doesn't cause consumer protection to trump safety and soundness," he said. "I think there is a way for us to get there and certainly I look forward to trying.”

Under the Democrats’ proposals, the new agency would acquire consumer protection responsibilities from the Federal Reserve. Some Fed officials oppose that separation.

“You want to force your central bank to know more and understand better what those interactions are and how this financial sector's working,” said James Bullard, President and CEO of the Federal Reserve Bank of St. Louis.

The Treasury Department, long focused on congressional movement on regulatory reform, said Corker chose "to work on a bipartisan basis with Chairman Dodd to pass financial reform that will end too big to fail and stop abusive practices that hurt American families,”according to spokesperson for the department.